Pinnacol no AIG (updated)

Update: I posted this as news was developing. My initial post wasn’t at all clear that only the $500 million raid is off the table. Another bill, SB 281, continues to move forward. Should it succeed, it would put Pinnacol under state control, and require an audit and review of the company.

It was bad enough that college students were duped by Democrats into thinking that Pinnacol, which has nothing to do with funding higher education, was risking their education.

Yesterday, state Rep. Jack Pommer got so worked up he said he considered it fair game to compare Colorado’s guaranteed – and successful – worker’s compensation insurer with AIG, the failed massive insurance firm that has helped plunge the world into a recession with its reckless mismanagement.

That’s quite a trick, considering it violates logic, no matter which side of the state’s takeover attempt of Pinnacol Assurance you’re on.

“I think we’ve somehow created this entity where you can do pretty much whatever you want,” Pommer, the Boulder Democrat, said yesterday in his role as chairman of the House Appropriations Committee. (And “appropriations” in this context has taken on surreal new meaning for those of us who opposed the would-be $500 million raid of the quasi-governmental entity.)

“It’s almost like we’ve created an AIG, but there’s no oversight in terms of shareholders,” Pommer said.

Let’s take this apart.

Pinnacol is overseen by a board of directors appointed by the governor. So, first off, we have oversight responsible to the taxpayers and voters of Colorado.

Which is clearly exemplified by this fact. Earlier this decade, Pinnacol was struggling. The legislature and then Gov. Bill Owens worked to reform the insurer. The lawmakers gave it a status much like that of a private company and hired a new and (demonstrably) talented chief executive.

The reforms worked. Pinnacol now offers insurance to employers and their employees at one of the lowest average rates in the country. The company even has returned money, in the form of dividends, to its policyholders to the tune of nearly $300 million in the last few years.

By policyholders, we mean 1.5 million men and women working for 58,000 employers. That’s real-life human beings, Mr. Pommer. Lower costs for worker’s comp means better wages and benefits. (Which is kind of cool and not really nefarious – at all.)

Pinnacol’s success came despite the fact that the insurer is required by the state to offer worker’s compensation insurance even to the riskiest employers – those who can’t afford it or who would never win policies from private insurers. Companies like construction and drilling and mining – dangerous jobs many insurance concerns would avoid. But jobs vital to our economy.

Yes, the state gives Pinnacol tax-exempt status to help it absorb that risk; but the state is in no way obligated to bail out Pinnacol should the insurer fail.

Now. AIG, before the bailouts, was a its own company. It peddled in its newfangled credit-default swaps and lost dramatically. After the government stepped in, Congress allowed the company to pay bonuses to the financial wizards who created the mess to remain through the cleanup.

Congress had oversight, but squandered it in its mad dash to pass the $787 billion so-called stimulus bill no one even had a chance to read.

So what is it exactly that Pommer is saying? How is Pinnacol like AIG? How is it even just a little like AIG?

The answer is: Not even a little.

Some of the Democrats under the Gold Dome also condemned Pinnacol for salaries for nine top executives that range from $168,000 a year to just under $448,813 for the new CEO. They also do their business in a pricey building.

If Coloradans think that’s too much money (and my colleagues remind me that several officials at the University of Colorado, which Pommer is trying to spare from cuts, are paid far more), Pinnacol’s governor-appointed board presumably could trim the compensation. If the building’s too nice, the board could move them and sell the place.

But that’s another matter, and it has little to do with robbing money paid by working men and women from a company that protects them and their families if they are injured or worse on the job.

Pinnacol had initially expressed a desire to do something to help the legislature, but that collapsed soon enough in this poisoned atmosphere.

Meanwhile, House Majority Leader Paul Weissmann, D-Louisville, who sponsored one of the takeover bills, said yesterday, “Let me be very clear. I’m not interested in a deal.”

If Pommer et al wish to take over Pinnacol, that’s one thing. But to insult them with illogical comparisons is quite another.

The lack of reasoned debate and civility in this matter is truly regrettable, and I suspect the bad blood already has come back to haunt lawmakers, and part of the reason this raid has collapsed.

Great points! My concern is that there has been no discussion about the state’s attempt to take control of Pinnacol. Yes, the attempt to steal their $ has been stopped but how about the other issue? Any word?

The state has already shown they can’t run this business and in my opinion, any point to suck them back in would would not serve Pinnacol’s clients…

Tom

Great points! My concern is that there has been no discussion about the state’s attempt to take control of Pinnacol. Yes, the attempt to steal their $ has been stopped but how about the other issue? Any word?

The state has already shown they can’t run this business and in my opinion, any point to suck them back in would would not serve Pinnacol’s clients…

Tom

Great points! My concern is that there has been no discussion about the state’s attempt to take control of Pinnacol. Yes, the attempt to steal their $ has been stopped but how about the other issue? Any word?

The state has already shown they can’t run this business and in my opinion, any point to suck them back in would would not serve Pinnacol’s clients…

Gaar Potter

Good job Post! Thanks for pointing out the villification of Pinacol execs etc. that was going on. I admire a company that is successfully providing a vital service for employers and workers. I seriously doubt that the State could efficiently provide this coverage.

There are 2 aspects of this whole issue that have bothered me all along:

1. If the shortfall is $300 million, why was the TAKING going to be $500 million?
2. Why is the $300 million “shortfall” attributed to higher education? State money is fungible, and the focus of this shortfall on one particular piece of the budget is puzzling.

Gaar Potter

Good job Post! Thanks for pointing out the villification of Pinacol execs etc. that was going on. I admire a company that is successfully providing a vital service for employers and workers. I seriously doubt that the State could efficiently provide this coverage.

There are 2 aspects of this whole issue that have bothered me all along:

1. If the shortfall is $300 million, why was the TAKING going to be $500 million?
2. Why is the $300 million “shortfall” attributed to higher education? State money is fungible, and the focus of this shortfall on one particular piece of the budget is puzzling.

Gaar Potter

Good job Post! Thanks for pointing out the villification of Pinacol execs etc. that was going on. I admire a company that is successfully providing a vital service for employers and workers. I seriously doubt that the State could efficiently provide this coverage.

There are 2 aspects of this whole issue that have bothered me all along:

1. If the shortfall is $300 million, why was the TAKING going to be $500 million?
2. Why is the $300 million “shortfall” attributed to higher education? State money is fungible, and the focus of this shortfall on one particular piece of the budget is puzzling.

vg

Well stated.

vg

Well stated.

Sabrina Willis-Haywood

THANK YOU! You are so right on!

Sabrina Willis-Haywood

THANK YOU! You are so right on!

Sabrina Willis-Haywood

THANK YOU! You are so right on!

Sabrina Willis-Haywood

THANK YOU! You are so right on!

Sabrina Willis-Haywood

THANK YOU! You are so right on!

CinCO

I agree wholeheartedly. The reference to AIG is about as sound as saying the latest attempt by Washington to right our fledgling economy borders anywhere near a ‘stimulus’ plan.
I think there could/should have been far more done cooperatively between Pinnacol’s management and State Rep’s. to offer a much better solution than a rabid ‘takeover’ by a bunch of Dem’s hell-bent on spinning things to make their case appear legitimate. I don’t think education should suffer, and at the same time, I don’t think a successful company like Pinnacol – Quasi-Governmental or not – should be penalized for their success (sounds like Socialism to me). How about a no or low-interest loan to the State by Pinnacol? How about taxing them to some small degree starting now in order to be a bit more proactive going forward? Sure, rates might have to be raised a bit, but as low as they already are now, it wouldn’t kill anyone to pay a small bit more. How about we find somebody worth electing who can show a bit more fiscal responsibility so as not to get us into this mess to begin with? How about we redistribute something from our State’s poor-man’s tax authority (lottery) into something besides Parks for a while. Our parks are beautiful enough and could sustain not having ‘improvements’ made for a couple years until we get our proverbial feet back under us, economically speaking.
It’s appalling that the now-prevailing mindset in Washington of ‘big government’ taking over has now trickled down to the State level. This hits me where I live and I’m just disgusted by it. I’m worried less about our current elected officials as I am the base of Americans who put them there to begin with.

CinCO

I agree wholeheartedly. The reference to AIG is about as sound as saying the latest attempt by Washington to right our fledgling economy borders anywhere near a ‘stimulus’ plan.
I think there could/should have been far more done cooperatively between Pinnacol’s management and State Rep’s. to offer a much better solution than a rabid ‘takeover’ by a bunch of Dem’s hell-bent on spinning things to make their case appear legitimate. I don’t think education should suffer, and at the same time, I don’t think a successful company like Pinnacol – Quasi-Governmental or not – should be penalized for their success (sounds like Socialism to me). How about a no or low-interest loan to the State by Pinnacol? How about taxing them to some small degree starting now in order to be a bit more proactive going forward? Sure, rates might have to be raised a bit, but as low as they already are now, it wouldn’t kill anyone to pay a small bit more. How about we find somebody worth electing who can show a bit more fiscal responsibility so as not to get us into this mess to begin with? How about we redistribute something from our State’s poor-man’s tax authority (lottery) into something besides Parks for a while. Our parks are beautiful enough and could sustain not having ‘improvements’ made for a couple years until we get our proverbial feet back under us, economically speaking.
It’s appalling that the now-prevailing mindset in Washington of ‘big government’ taking over has now trickled down to the State level. This hits me where I live and I’m just disgusted by it. I’m worried less about our current elected officials as I am the base of Americans who put them there to begin with.

CinCO

I agree wholeheartedly. The reference to AIG is about as sound as saying the latest attempt by Washington to right our fledgling economy borders anywhere near a ‘stimulus’ plan.
I think there could/should have been far more done cooperatively between Pinnacol’s management and State Rep’s. to offer a much better solution than a rabid ‘takeover’ by a bunch of Dem’s hell-bent on spinning things to make their case appear legitimate. I don’t think education should suffer, and at the same time, I don’t think a successful company like Pinnacol – Quasi-Governmental or not – should be penalized for their success (sounds like Socialism to me). How about a no or low-interest loan to the State by Pinnacol? How about taxing them to some small degree starting now in order to be a bit more proactive going forward? Sure, rates might have to be raised a bit, but as low as they already are now, it wouldn’t kill anyone to pay a small bit more. How about we find somebody worth electing who can show a bit more fiscal responsibility so as not to get us into this mess to begin with? How about we redistribute something from our State’s poor-man’s tax authority (lottery) into something besides Parks for a while. Our parks are beautiful enough and could sustain not having ‘improvements’ made for a couple years until we get our proverbial feet back under us, economically speaking.
It’s appalling that the now-prevailing mindset in Washington of ‘big government’ taking over has now trickled down to the State level. This hits me where I live and I’m just disgusted by it. I’m worried less about our current elected officials as I am the base of Americans who put them there to begin with.

Dan Combs

Mr. Plunkett is dead-on. This witch-hunt of Pinnacol has been so bizarre because (1) it’s a well-run organization and as such, should be left alone, and (2) the salaries of the executives are well-deserved, and more importantly, none of our business.

Mr. Plunkett is dead-on. This witch-hunt of Pinnacol has been so bizarre because (1) it’s a well-run organization and as such, should be left alone, and (2) the salaries of the executives are well-deserved, and more importantly, none of our business.

Another socialistic attempt by our state government, led by Governor Ritter, to increase the cost of doing business in the State of Colorado for the sole purpose of hiding their inability to resolve budget problems in the face of radically decreased income tax revenues for the State. Why can’t Governor Ritter think of more rationale solutions–better use of State land to increase revenues: private/public partnerships to utilize state lands to advance his supposed New Energy Economy rhetoric; cost control; policies designed to encourage business migration from states facing problems much worse than Colorado and are attempting to address those difficulties with increased taxes; etc. Has everyone forgotten that one way to increase aggregate tax revenues, is to actually decrease tax rates, which encourages and attracts businesses who hire employees. Let’s be progressive, not destructive, in establishing and implementing state policy towards business.

David Stafford Johnson

Another socialistic attempt by our state government, led by Governor Ritter, to increase the cost of doing business in the State of Colorado for the sole purpose of hiding their inability to resolve budget problems in the face of radically decreased income tax revenues for the State. Why can’t Governor Ritter think of more rationale solutions–better use of State land to increase revenues: private/public partnerships to utilize state lands to advance his supposed New Energy Economy rhetoric; cost control; policies designed to encourage business migration from states facing problems much worse than Colorado and are attempting to address those difficulties with increased taxes; etc. Has everyone forgotten that one way to increase aggregate tax revenues, is to actually decrease tax rates, which encourages and attracts businesses who hire employees. Let’s be progressive, not destructive, in establishing and implementing state policy towards business.

David Stafford Johnson

Another socialistic attempt by our state government, led by Governor Ritter, to increase the cost of doing business in the State of Colorado for the sole purpose of hiding their inability to resolve budget problems in the face of radically decreased income tax revenues for the State. Why can’t Governor Ritter think of more rationale solutions–better use of State land to increase revenues: private/public partnerships to utilize state lands to advance his supposed New Energy Economy rhetoric; cost control; policies designed to encourage business migration from states facing problems much worse than Colorado and are attempting to address those difficulties with increased taxes; etc. Has everyone forgotten that one way to increase aggregate tax revenues, is to actually decrease tax rates, which encourages and attracts businesses who hire employees. Let’s be progressive, not destructive, in establishing and implementing state policy towards business.

Kathleen June

I didn’t even have to dust off my degree in public administration to see that the attempted commandeering of Pinnacol’s profits was a bad idea. Perhaps my fellow Democrats got a little over-anxious, allowing fears of the shrinking economy to fuel what ended up looking like aggression and avarice — rather than good governance — tilted at a particularly enticing windmill. And it is too bad that the discussion deteriorated to such a degree. I hope the notion of taking over the worker’s comp business will also die on the vine. It didn’t work before, which is why Pinnacol was established in the first place. Let’s not mess with Pinnacol’s success, and direct our law makers’ creativity and industry toward other viable funding options. The next best move for legislators will be to make amends and graciously invite Pinnacol to assist where and how their board sees fit.

Kathleen June

I didn’t even have to dust off my degree in public administration to see that the attempted commandeering of Pinnacol’s profits was a bad idea. Perhaps my fellow Democrats got a little over-anxious, allowing fears of the shrinking economy to fuel what ended up looking like aggression and avarice — rather than good governance — tilted at a particularly enticing windmill. And it is too bad that the discussion deteriorated to such a degree. I hope the notion of taking over the worker’s comp business will also die on the vine. It didn’t work before, which is why Pinnacol was established in the first place. Let’s not mess with Pinnacol’s success, and direct our law makers’ creativity and industry toward other viable funding options. The next best move for legislators will be to make amends and graciously invite Pinnacol to assist where and how their board sees fit.

Kathleen June

I didn’t even have to dust off my degree in public administration to see that the attempted commandeering of Pinnacol’s profits was a bad idea. Perhaps my fellow Democrats got a little over-anxious, allowing fears of the shrinking economy to fuel what ended up looking like aggression and avarice — rather than good governance — tilted at a particularly enticing windmill. And it is too bad that the discussion deteriorated to such a degree. I hope the notion of taking over the worker’s comp business will also die on the vine. It didn’t work before, which is why Pinnacol was established in the first place. Let’s not mess with Pinnacol’s success, and direct our law makers’ creativity and industry toward other viable funding options. The next best move for legislators will be to make amends and graciously invite Pinnacol to assist where and how their board sees fit.

Kathleen June

I didn’t even have to dust off my degree in public administration to see that the attempted commandeering of Pinnacol’s profits was a bad idea. Perhaps my fellow Democrats got a little over-anxious, allowing fears of the shrinking economy to fuel what ended up looking like aggression and avarice — rather than good governance — tilted at a particularly enticing windmill. And it is too bad that the discussion deteriorated to such a degree. I hope the notion of taking over the worker’s comp business will also die on the vine. It didn’t work before, which is why Pinnacol was established in the first place. Let’s not mess with Pinnacol’s success, and direct our law makers’ creativity and industry toward other viable funding options. The next best move for legislators will be to make amends and graciously invite Pinnacol to assist where and how their board sees fit.

Kathleen June

I didn’t even have to dust off my degree in public administration to see that the attempted commandeering of Pinnacol’s profits was a bad idea. Perhaps my fellow Democrats got a little over-anxious, allowing fears of the shrinking economy to fuel what ended up looking like aggression and avarice — rather than good governance — tilted at a particularly enticing windmill. And it is too bad that the discussion deteriorated to such a degree. I hope the notion of taking over the worker’s comp business will also die on the vine. It didn’t work before, which is why Pinnacol was established in the first place. Let’s not mess with Pinnacol’s success, and direct our law makers’ creativity and industry toward other viable funding options. The next best move for legislators will be to make amends and graciously invite Pinnacol to assist where and how their board sees fit.

Kathleen June

I didn’t even have to dust off my degree in public administration to see that the attempted commandeering of Pinnacol’s profits was a bad idea. Perhaps my fellow Democrats got a little over-anxious, allowing fears of the shrinking economy to fuel what ended up looking like aggression and avarice — rather than good governance — tilted at a particularly enticing windmill. And it is too bad that the discussion deteriorated to such a degree. I hope the notion of taking over the worker’s comp business will also die on the vine. It didn’t work before, which is why Pinnacol was established in the first place. Let’s not mess with Pinnacol’s success, and direct our law makers’ creativity and industry toward other viable funding options. The next best move for legislators will be to make amends and graciously invite Pinnacol to assist where and how their board sees fit.

Susan Horecki

Great analysis and commentary! I guess we in Colorado only need now to be concerned that making more than $160,000 is too much and therefore subject to penalty and punishment. Just a few weeks ago the feds told us the bar was $250,000. Time to wind down our efforts and strive to get a union, government job? I have no direct or indirect relationship or benefit with Pinnacol. I hope they keep doing what they are doing and do not feel compelled to do other than that.

Susan Horecki

Great analysis and commentary! I guess we in Colorado only need now to be concerned that making more than $160,000 is too much and therefore subject to penalty and punishment. Just a few weeks ago the feds told us the bar was $250,000. Time to wind down our efforts and strive to get a union, government job? I have no direct or indirect relationship or benefit with Pinnacol. I hope they keep doing what they are doing and do not feel compelled to do other than that.

Rochelle

Wish those facts could get to everyone. Hey, how about if the house and senate got paid like Pinnacol employees do; a base salary and a quarterly gainshare if they hit their performance targets. The state would save a lot of money since neither body gets full pay unless they do what they’re supposed to and in an ethical manner. Let’s introduce a bill! Shoot, if the house and senate can attempt what they’re up to, we should certainly be able to get this in!

Rochelle

Wish those facts could get to everyone. Hey, how about if the house and senate got paid like Pinnacol employees do; a base salary and a quarterly gainshare if they hit their performance targets. The state would save a lot of money since neither body gets full pay unless they do what they’re supposed to and in an ethical manner. Let’s introduce a bill! Shoot, if the house and senate can attempt what they’re up to, we should certainly be able to get this in!

Rochelle

Wish those facts could get to everyone. Hey, how about if the house and senate got paid like Pinnacol employees do; a base salary and a quarterly gainshare if they hit their performance targets. The state would save a lot of money since neither body gets full pay unless they do what they’re supposed to and in an ethical manner. Let’s introduce a bill! Shoot, if the house and senate can attempt what they’re up to, we should certainly be able to get this in!

jnvarnell

Pinnacol is not a champion of free enterprise. It is an unfair monopoly, using its quasi-governmental status to dominate the workers compensation market and hoard cash. Its ill-gotten gains should be used to help solve the budget crisis, willingly.

jnvarnell

Pinnacol is not a champion of free enterprise. It is an unfair monopoly, using its quasi-governmental status to dominate the workers compensation market and hoard cash. Its ill-gotten gains should be used to help solve the budget crisis, willingly.

jnvarnell

Pinnacol is not a champion of free enterprise. It is an unfair monopoly, using its quasi-governmental status to dominate the workers compensation market and hoard cash. Its ill-gotten gains should be used to help solve the budget crisis, willingly.

jnvarnell

Pinnacol is not a champion of free enterprise. It is an unfair monopoly, using its quasi-governmental status to dominate the workers compensation market and hoard cash. Its ill-gotten gains should be used to help solve the budget crisis, willingly.

Joey Bunch has been a reporter for 28 years, including the last 12 at The Denver Post. For various newspapers he has covered the environment, water issues, politics, civil rights, sports and the casino industry.